Kosmic received a special one-time order to buy 6,000 of its portable radios for $20.00 each. The radio's normal selling price is $25.00 per unit. Each radio costs $21.50 to make: $15.00 in variable costs per radio and $6.50 of fixed costs per radio. Incremental fixed costs to make this order are $4.00 per unit. Kosmic has excess capacity of 5,000 radios. This one-time order opportunity is in a new market for Kosmic, one in which it has been eager to enter and in which there is no identified competition. The potential in this market for Kosmic is 25,000 radios annually. Kosmic is considering buying equipment for $21,000, with a 3 year useful life that would expand their capacity by 30,000 radios annually.

 Should Kosmic accept the order from part a) above? Why or why not? (3 Points) 

Answer rating: 100% (QA)

To determine whether Kosmic should accept the special onetime order we need to evaluate the incremen... View the full answer